Amateur buy-to-let landlords are being forced out of the market after lucrative tax breaks were scrapped and reduced the amount of finance available.
In 2007, banks authorised 16,000 loans every month for buy-to-let investors. In February, that figure has fallen to 4,800.
According to figures from UK Finance, only a quarter of newly issued loans are being taken out by amateur landlords. Most of the market now consists of professional operations trading through limited companies with multiple properties on their books.
Amateur landlords have been driven from the market by a three per cent stamp duty surcharge which is payable by existing property owners.
Mortgage broker Andrew Montlake told The Times: ‘There has been a seismic shift over the past couple of years with the buy-to-let market being supported by professional landlords who have the scale and efficiency to cope with the tax changes. The amateur landlords we see now are people buying out relatives from inherited properties and wealthy individuals who are making a long-term investment for their kids or pension and don’t mind not making much profit in the meanwhile.’